How does Oblivion differ?
I think you might be referring to the very common faction and feudalism that was common and quite rampant throughout the middle-ages, in which case, yes, TESIII: Morrowind is very much like TESIV: Oblivion (I've never played Daggerfall, so I won't compare them). However, the landscape and the feel behind Morrowind delivered an intense pallat of something...different. Morrowind was definetely a strange and foreign land.
However, there were still the recognizeable aspects of feudalism and faction running behind the scenes, however, it was capitalized on it differently in TES III when taken in account with the detail, referring to lore, surroundings, and the various cultures. Also, the Imperial government (which actually pushes me towards a Roman Empire feel rather than a Medieval one), was made out to be the agency or faction of the game that didn't really fit with the land. So the Midieval agency was actually the foreigner in the game, rather than being the original occupant of the land.
Now...in relation to the topic.
What seti18 said about Akavir being a great hook is absolutely true. By making Akavir an object of such mystery and secrecy, the developers have made it into an incredible hook and an idea. To just suddenly forget or ignore that hook and produce a game such as you suggested shadow_Hiei, would ultimately stomp to death the device created. Also, since Akavir has become an idea, an embodiment of mystery and taboo (and much more), almost knowing anything about it would kill the idea and bring a lot of disappointment to people.
NOW I'm not saying that Akavir couldn't be made into what you're suggesting, and I'm sure there are people who would like to see it done. However, I think it should be done extremely, and I emphasis, EXTREMELY, slowly. Lore about the land would be revelaed slowly, enough for Akavir to keep its illusion of grandeur and mystery, and even then, try to keep it once its exposed. If that can be done, then maybe it can be made into the basis of a game.
Also, in all fairness...we may know what the Nord's and Argonian's cultures are like like, but we have barely explored them. Sure we can get an idea of their beliefs and customs from the lore we have, but we have only scratched the surface with the content we have. There are plenty of opportunties of exploration in the places we know about.